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E-Commerce in China is Booming

Cross-border e-commerce has become an increasingly important pillar of China’s foreign trade, with over 10,000 traditional foreign trade firms going online for the first time last year.

China has vowed to develop new forms and models of trade, such as cross-border e-commerce, and support enterprises in diversifying their markets overseas, according to this year’s government work report unveiled earlier this month.

Experts and industry insiders say that cross-border e-commerce will continue to propel China’s foreign trade growth due to less-tapped market potential and more policy incentives in the years to come.

Global demand for made-in-China products has skyrocketed since the pandemic, said Zheng Changqing, general manager of eBay’s cross-border commerce division in China.

European and American consumers have grown markedly more accustomed to shopping online and more open to new brands, he said.

Industry data shows that global e-commerce sales in 2020 climbed 16.5 percent year on year to 3.91 trillion U.S. dollars, accounting for 16.8 percent of overall retail value.

“Sales by Chinese exporters took off on eBay, which revealed vast market opportunities and the strength of China’s supply chains,” said Zheng, who believes that China also has a competitive edge in human resources and logistics.

China saw its total imports and exports of goods expand 1.9 percent year on year to 32.16 trillion yuan in 2020. It was the world’s only major economy to register positive growth last year.

To gain more traction with global consumers, Chinese exporters have expanded their portfolios over the years to feature products with higher added-value and unique designs, particularly outdoor supplies, sports equipment and home decor, according to an Amazon.com report last August.

Start-ups with tech-intensive, eye-opening products are more involved in the game. CVGC, a Wuhan-based optic firm, developed a stick-on microscope lens for cellphones two years ago that became a bestseller on Amazon.com. The company’s exports amounted to around 10 million yuan last year, accounting for half of its revenue.

Going forward, experts agree that with improved cross-border e-commerce services, more companies, especially small and medium-sized enterprises from China and abroad, will play bigger roles in the global market.

Cross-border e-commerce in China is undergoing a shift from simply doing business online to building a comprehensive service system that covers product design, e-commerce platforms, logistics, financing and more, said Wang Jian, a professor of international trade and economics at the University of International Business and Economics.

A full-fledged service system will help bring Chinese firms closer to local markets worldwide and create a win-win situation for everyone, said Wang.

Government support will continue to take effect in 2021. China is establishing 46 new, comprehensive cross-border e-commerce pilot zones and simplifying customs clearance procedures. Though more than 1,800 overseas warehouses are already serving as infrastructure for trade, the country is encouraging companies to build more.

Trade pacts like the Regional Comprehensive Economic Partnership are also expected to further clear the way for e-commerce trade between member economies.

S. Jack Heffernan Ph.Dhttps://www.knightsbridgelaw.com
S. Jack Heffernan Ph.D. Economist at Knightsbridge holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Crypto, Mining, Shipping, Technology and Financial Services.

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